Taiwan has announced plans to allow the exchange of Chinese currency on two of its offshore islands.

Taiwan Premier Frank Hsieh made the announcement Wednesday, in Taipei.

He said people on the islands of Kinmen and Matsu, just off the coast of China's Fujian Province, will, for the first time, be allowed to exchange the yuan and the New Taiwan dollar beginning October 3.

Exchange of the two currencies on the main island of Taiwan is still banned.

Taiwan has restricted transportation links, as well as commercial and financial contacts with China since the island separated at the end of a civil war in 1949.

China continues to claim sovereignty over Taiwan.